1.)

England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 40 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 20 scones per hour or 2 sweaters per hour.

English/Scottish workers have an absolute advantage in producing scones, and English/Scottish workers have an absolute advantage in producing sweaters.

English/Scottish workers have a comparative advantage in producing scones, and English/Scottish workers have a comparative advantage in producing sweaters.

If England and Scotland decide to trade, Scotland will trade scones/sweaters to England.

If a Scottish worker could produce only 1 sweater per hour, Scotland would still/would no longer gain from trade, and England would still/would no longer gain from trade.

2.)

When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods.The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Sylvania. Both countries produce lemons and coffee, each initially (i.e., before specialization and trade) producing 18 million pounds of lemons and 9 million pounds of coffee, as indicated by the grey stars marked with the letter A.

? ? Maldonia Sylvania 48 48 42 42 36 36 PPF 30 30 24 24 COFFEE (Millions of pounds) COFFEE (Millions of pounds) 18 PPF 18 12 12 A A 6 6 0 0 0 6 12 24 30 36 42 48 0 6 12 18 24 30 36 42 48 LEMONS (Millions of pounds) LEMONS (Millions of pounds)? Maldonia 48 + 42 Consumption After Trade 36 30 COFFEE (Millions of pounds) 24 18 PPF 12 A 6 0 0 6 12 18 24 30 36 42 48 LEMONS (Millions of pounds)Sylvania 48 + 42 Consumption After Trade 36 PPF 30 COFFEE (Millions of pounds) 24 18 12 A 6 0 0 6 12 18 24 30 36 42 48 LEMONS (Millions of pounds)Quantity of Computers (Millions) 30 27 24 21 18 15 12 10 20 30 40 50 60 70 Quantity of Shirts (Millions) 80 90 100 U.S. PPF + China PPF .1. U.S. without Trade at China without Trade